Mr Blair's spokesman said there was not a single person in Downing Street remotely connected with "doing down Prescott".
The controversy over who is in charge of transport - Mr Prescott or his minister of state, Gus Macdonald - overshadowed the Deputy Prime Minister's keynote speech on an pounds 80bn 10-year transport strategy, including a promise of better public transport and congestion charging for cars.
Mr Prescott will now bid for more Treasury money for transport by the next election. The transport policy marks a shift to dampen public expectation of immediate improvements, with a softening of the anti-car rhetoric, which was welcomed by motoring groups but worried environmentalists.
Mr Prescott, who tomorrow announces a pounds 700m package of new roads, by- passes and bus schemes for local councils, was praised by the AA, RAC and Transport 2000, but was accused by environmental campaigners of abandoning his commitment to reduce car use.
John Dawson, head of policy at the AA, said: "We think this is a day to celebrate because we have, as the Deputy Prime Minister has set out, a 10-year vision of what the transport position should be like in a series of stepped changes."
Although Lord Macdonald said the Government was still committed to reducing traffic levels "where possible" - such as in some cities - he warned: "I think it would be utterly unrealistic to say you can reduce the traffic level for lorries and cars over the next 10 years in the United Kingdom, not with the kind of economic growth that we've got at the moment."
Charles Secrett, director of Friends of the Earth, said Mr Prescott had abandoned his 1997 commitment to cut traffic levels, when he had said: "I will have failed if in five years' time there are not many more people using public transport and far fewer journeys by car..."
Giving day-to-day power over transport to an unelected peer upset Labour's Gwyneth Dunwoody, who chairs the Commons select committee on transport. She said Lord Macdonald would not be able to answer transport questions in the Commons. "I would say that frankly I do not approve of day-to-day transport matters being in the hands of a non-elected member in another chamber."
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